Raising American Wages…by Raising American Wages

With Americans still trapped in the fifth year of our Great Recession, and median personal income having been essentially stagnant for forty years, perhaps we should finally admit that decades of economic policies have largely failed.

The last two years of our supposed recovery have seen American growth rates averaging well under 2 percent.[i] Although our media often pays greater attention to the recent gains in stock market and asset prices, such paltry growth means that many of the millions of jobs lost in 2008 and 2009 will never be regained, and the broadest measures of American unemployment and underemployment will remain stuck in the vicinity of 15%.[ii] Meanwhile, an astonishing 93% of the total increase in income during the recovery period has been captured by the top one percent of earners, who now hold almost as much net wealth as the bottom 95 percent of our society.[iii] This polarized situation does not bode well for our future, and unless broader social trends in jobs and incomes soon improve, dark days surely lie ahead.

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If we seek to create jobs and raise incomes for ordinary Americans, we should consider what sorts of jobs and incomes these might be. Since economists and policy analysts tend to have advanced degrees and many leading journalists these days are Ivy League alumni, their employment perceptions may often diverge from reality. So let us review the official government data from the Bureau of Labor Statistics (BLS), as discussed by Prof. Jack Metzgar of Chicago’s Center for Working-Class Studies and brought to my attention in an excellent column by the late Alexander Cockburn.[iv] Metzgar writes:

The BLS’s three largest occupational categories by themselves accounted for more than one-third of the workforce in 2010 (49 million jobs), and they will make an outsized contribution to the new jobs projected for 2020. They are:

Office and administrative support occupations (median wage of $30,710)

Sales and related occupations ($24,370)

Food preparation and serving occupations ($18,770)

Other occupations projected to provide the largest number of new jobs in the next decade include child care workers ($19,300), personal care aides ($19,640), home health aides ($20,560), janitors and cleaners ($22,210), teacher assistants ($23,220), non-construction laborers ($23,460), security guards ($23,920), and construction laborers ($29,280).

Although our bipartisan elites regularly suggest higher education as the best elixir for what ails our economy and its workers, few of these job categories seem logical careers for individuals who have devoted four years of their life to the study of History, Psychology, or Business Education, often at considerable expense. Nor would we expect the increased production of such degrees, presumably at lower-tier or for-profit colleges, to have much positive impact on the wages or working conditions of janitors or security guards.

Consider that only 20% of current jobs require even a bachelors’ degree.[v]More than 30% of Americans over the age of 25 have graduated college, so this implies that one-third or more of today’s college graduates are over-educated for their current employment, perhaps conforming to the stereotype of the college psychology major working at Starbucks or McDonalds.

Furthermore, this employment situation will change only gradually over the next decade, according to BLS projections. Millions of jobs in our “knowledge economy” do currently require a post-graduate degree, and the numbers are growing rapidly; but even by 2020, these will constitute less than 5% of the total, while around 70% of all jobs will still require merely a high school diploma.[vi]

Education may be valuable for other reasons, but it does not seem to hold the answer to our jobs and incomes problem.

If additional education is a dead end, other partisan nostrums appear equally doubtful. Large cuts in government taxation or regulation are unlikely to benefit the average sales clerk or waitress. And the favored progressive proposal of a huge new government stimulus package has absolutely no chance of getting through Congress; but even if it did, few of the funds would flow to the low-paid private sector service workers catalogued above, and any broader social gains would rely upon a secondary boost in economic activity produced by putting extra government dollars into private pockets.

So how might we possibly raise the wages of American workers who fill this huge roster of underpaid and lesser-skilled positions, holding jobs which are almost entirely concentrated in the private service sector?

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Perhaps the most effective means of raising their wages is simply to raise their wages.

Consider the impact of a large increase in the federal minimum wage, perhaps to $10 or more likely $12 per hour.

The generally low-end jobs catalogued above are entirely in the non-tradable service sector; they could not be outsourced to even lower-paid foreigners in Bangalore or Manila. Perhaps there might be some incentive for further automation, but the nature of the jobs in question – focused on personal interactions requiring human skills – are exactly those least open to mechanical replacement. Just consider the difficulty and expense of automating the job of a home health care aide, child care worker, or bartender.

With direct replacement via outsourcing or automation unlikely, employers responding to a higher minimum wage would be faced with the choice of either increasing the wages of their lowest paid workers by perhaps a couple of dollars per hour, or eliminating their jobs. There would likely be some job loss,[vii] but given the simultaneous rise in labor costs among all competitors and the localized market for these services, the logical business response would be to raise prices by a few percent to help cover increased costs while also trimming current profit margins. Perhaps consumers would pay 3 percent more for Wal-Mart goods or an extra dime for a McDonald’s hamburger, but most of the jobs would still exist and the price changes would be small compared to typical fluctuations due to commodity and energy prices, international exchange rates, or Chinese production costs.

The resulting one-time inflationary spike would slightly raise living expenses for everyone in our society, but the immediate 20% or 30% boost in the take-home pay of many millions of America’s lowest income workers would make it easy for them to absorb these small costs, while the impact upon the middle or upper classes would be totally negligible. An increase in the hourly minimum wage from the current federal level of $7.25 to (say) $12.00 might also have secondary, smaller ripple effects, boosting wages currently above that level as well.

A minimum wage in this range is hardly absurd or extreme. In 2012 dollars, the American minimum wage was over $10 in 1968 during our peak of postwar prosperity and full employment.[viii] The average minimum wage in Canadian provinces is currently well over $10 per hour, the national figure for France is more than $12, and Australia has the remarkable combination of a minimum wage of nearly $16.50 together with 5 percent unemployment.[ix]

Graphic by New America Foundation

Even a large increase in the minimum wage would have very little impact on America’s international competitiveness since almost everyone employed in our surviving manufacturing export sector – whether in unionized Seattle or non-union South Carolina – already earns far above the current minimum wage. The same is also true for government workers, resulting in negligible increased cost to taxpayers.

Leaving aside the obvious gains in financial and personal well-being for the lower strata of America’s working class, there would also be a large economic multiplier effect, boosting general business activity in our weak economy. America’s working poor tend to spend almost every dollar they earn, often even sinking into temporary debt on a monthly basis.[x] Raising the annual income of each such wage-earner couple by eight or ten thousand dollars would immediately send those same dollars flowing into the regular consumer economy, boosting sales and general economic activity. In effect, the proposal represents an enormous government stimulus package, but one targeting the working-poor and funded entirely by the private sector.

Ironically, it is likely that major elements of the private sector would be perfectly happy with this arrangement. For example, despite their low-wage and anti-worker reputation, Wal-Mart’s top executives lobbied Congress in 2005 for an increase in the minimum wage, concerned that their working-class customer base was growing too impoverished to shop at their stores.[xi] Wal-Mart might never be willing to raise its wages in isolation, but if a higher minimum wage forces all competitors to do the same, then prices can also be raised to help make up the difference, while the large rise in disposable consumer income would greatly increase sales.

***

Although the direct financial benefits to working-class Americans and our economy as a whole are the primary justifications for the proposal, there are a number of subsidiary benefits as well, ranging across both economic and non-economic areas.

First, the net dollar transfers through the labor market in this proposal would generally be from higher to lower income strata, and lower-income individuals tend to pay a much larger fraction of their income in payroll and sales taxes. Thus, a large boost in working-class wages would obviously have a very positive impact on the financial health of Social Security, Medicare and other government programs funded directly from the paycheck. Meanwhile, increased sales tax collections would improve the dismal fiscal picture for state and local governments, and the public school systems they finance.

Furthermore, as large portions of the working-poor became much less poor, the payout of the existing Federal Earned Income Tax Credit (EITC) would be sharply reduced. Although popular among politicians, the EITC is a classic example of economic special interests privatizing profits while socializing costs: employers receive the full benefits of their low-wage workforce while a substantial fraction of the wage expense is pushed onto the taxpayers. Private companies should fund their own payrolls rather than rely upon substantial government subsidies, which produce major distortions in market signals.

Even on the highly contentious and seemingly unrelated issue of immigration, a large rise in the minimum wage might have a strongly positive impact. During the last decade or two, American immigration has been running at historically high levels, with the overwhelming majority of these immigrants being drawn here by hopes of employment.[xii] This vast influx of eager workers has naturally strengthened the position of Capital at the expense of Labor, and much of the stagnation or decline in working-class wages has probably been a result, since this sector has been in greatest direct competition with lower-skilled immigrants.[xiii]

Not only would a large rise in the minimum wage reverse many years of this economic “race to the bottom,” but it would impact immigration itself, even without changes in government enforcement policy. One of the few sectors likely to be devastated by a much higher minimum wage would be the sweatshops and other very low wage or marginal businesses which tend to disproportionably employ new immigrants, especially illegal ones. Sweatshops and similar industries have no legitimate place in a developed economy, and their elimination would reduce the sort of lowest-rung job openings continually drawing impoverished new immigrants. Meanwhile, those immigrants who have already been here some time, learned English, and established a solid employment record would be kept on at higher wages, reaping the same major benefits as non-immigrant Americans within the ranks of the working-poor.

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Finally, one of the more unexpected benefits of a large rise in the minimum wage would follow from a total reversal of bipartisan conventional wisdom. Whereas our elites regularly tell us that an increase in higher education might have the benefit of raising American wages, I would instead argue that a sharp rise in ordinary wages would have the benefit of reducing higher education, whose growth increasingly resembles that of an unsustainable bubble.

Between 2000 and 2010, enrollment in postsecondary institutions increased 37 percent, compared to just 11 percent during the previous decade, with the recent increase being almost three times that of the growth of the underlying population of 18- to 24-year-olds. Indeed, relative enrollment growth for older students – 25 and above – was far greater than for students in the younger, more traditional ages. Furthermore, “Business” has overwhelmingly become the most popular undergraduate major, attracting nearly as many students as the combined total of the next three categories – Social Sciences and History, Health Sciences, and Education.[xiv]

If rapidly growing numbers of individuals, especially those many years past their high school graduation, are now attending college and majoring in Business, they are probably not doing so purely out of love of learning and a desire for broadening their intellectual horizons. Instead, they have presumably accepted the pronouncements of authority figures that higher education will benefit them economically. Put in harsher terms, they may believe that a college degree is their best hope of avoiding a life of permanent poverty trapped in the ranks of the working-poor.

Although there is a clear mismatch between the requirements of America’s projected jobs and the benefits of a college education, this notion of “college or poverty” may not be entirely mistaken. A recent college graduate is almost 20 percentage points more likely to have a job than a person of the same age with only a high school degree.[xv] As a competitive signaling device, a 4-year degree may help someone land an office job as an administrative assistant rather than one as a fast-food server. But this is costly to the individual and to society.

Even leaving aside the absurdity of young people spending years of their lives studying business theory or psychology to obtain jobs which traditionally went to high school graduates, the financial cost is enormous. A generation or more ago, expenses at solid state institutions and similar colleges were fairly low, and could mostly be financed by small grants, parental savings, and part-time student jobs. But educational costs have increased 133% above inflation over the last thirty years,[xvi] and the government-subsidized college-loan industry has grown in parallel. Last year, the total volume of outstanding student-loan debt passed the trillion dollar mark, now exceeding either credit-card or auto loan debt.[xvii]

Two-thirds of recent college graduates borrowed to finance their education, and their average debt is over $23,000, while the load for those who pursue graduate or professional degrees can easily exceed the hundred thousand dollar mark.[xviii] These debts are exempt from bankruptcy discharge, and unless graduates quickly find high-paying jobs – not easy in an economy with very high youthful unemployment – the required payments may remain larger than the combined total of their federal, state, and local taxes. This privatized “education tax” may become a permanent, terrible burden, pushing any plans for marriage, family, and home purchase into the distant future. Barely half of 18- to 24-year-olds are currently employed, the lowest level in over sixty years,[xix]so we should not be surprised that a quarter of all student-loan payers are currently delinquent.[xx]Without the possibility of bankruptcy to clear their load, permanent debt-peonage for a substantial fraction of the next generation seems a very real possibility.

The aggressive marketing tactics of for-profit colleges and the student loan industry have disturbing parallels with the sub-prime lenders who played a destructive role in the Housing Bubble. Our national elites gave strong public support to the goal of universal home-ownership. Families were warned that if they did not stretch their income and their credit to buy a house at the inflated prices being offered, they would be permanently priced out of the market and condemned to second-class economic citizenship. Today, very similar warnings are made about the failure to invest in a college education, and this is backed by the aggressive advertising and sales tactics of the lucrative and well-connected for-profit sectors of the Higher Education-Industrial Complex, such as University of Phoenix and Kaplan Schools.

The lax lending standards and regulatory policies supporting greater homeownership were a major factor in our catastrophic financial collapse, in which the average family has now lost 40% of its net worth and many millions of Americans are on the edge of foreclosure, bankruptcy, and destitution.[xxi] Nearly everyone lost, while a tiny handful of individuals and companies made vast, unearned fortunes from facilitating the growth of the bubble or later betting upon its collapse. A similar outcome in higher education seems quite likely.

Now consider the impact of a sharp rise in the minimum wage, sufficient to remove the taint of poverty overhanging so many of our lower-tier jobs. Those academically-oriented students who plan to pursue challenging college majors in engineering, computer software, or other STEM fields would be completely unaffected by a rise in pay for home health aides, nor would there be any impact on the college plans of those seeking to broaden their horizons with serious academic study in literature, history, or philosophy.

But for those millions who regard postsecondary education as merely a way of punching their ticket with a “business” degree and thereby gaining a shot at a middle class income, the calculus would be different: four years of academic work, four years of foregone income, and many tens of thousands of dollars in tuition and fees would be weighed against earning a reasonable living straight out of high school or with a form of shorter vocational training like an apprenticeship. Certainly in the past, when well-paid factory jobs were plentiful, a large fraction of students made the latter choice, and seldom regretted it.

Meanwhile, if college enrollments were reduced to those who actually wanted or needed a college education, supply and demand would begin deflating our Higher Education Bubble, forcing a sharp drop in ever-escalating educational costs. Since government loans and subsidies would be targeted at a much smaller pool of students, they could be made more generous, reducing the debt burden on those who do still seek a degree.

***

Public policy experts sometimes glorify complexity, proposing intricate, interlocking systems aimed at a desired result. But such structures are only as strong as their weakest link, and a proposal too complex to fully understand is also too complex to fix. Our government has sought to ensure a decent living for American workers through an enormous array of income subsidies, public benefits, training programs, and educational loans; at this point, many of these components have accumulated powerful and parasitic side-beneficiaries while leaving the working class behind.

Since this vast and leaky conglomeration has failed at its intended goal, perhaps we should just try raising wages instead.

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107 Responses to Raising American Wages…by Raising American Wages

Of course if your already making $10-$12 an hour, you get the short end of this deal. I think the bigger problem is that inflation often outpaces the wage increases people earn thinking it will get them ahead. Also, many of the businesses that would be most affected by a rise in minimum have small margins for error in the labor cost of their business models (this is especially true in food service, runaway labor cost will kill you in food service). So the businesses most effective will either raise prices, causing more inflation that means that those who get raises will get less for their money, while those who were trying to get ahead are bumped cown to minimum wage as prices rise. Or people are laid off, meaning those left to work in the service sector will be working harder to satisfy customers already angered by raises in price.

Make no mistake, Im all for people earning more money, but not if that money is worth less. While the one percent is reinvesting thier dollars and earning faster than the rate of inflation, the working poor who cant afford expert to think for them have to make critical decisions based around a fluctuating dollar? Please, it would be better to stop draining their wealth with an economy based around the goverment fixing everything than it would be to try and have the government fix everything.

Or, how about the REALLY conservative prospect of admitting that many jobs just aren’t going to pay very well, and that’s life. That’s reality, something that seems to be sorely lacking at AmCon of late.

But no, let’s ape liberals and manipulate labor markets and use the power of the government to make employers pay more than a job is worth. Let’s continue to help pump the idea that everyone deserves a McMansion and free college, no matter how much their skills are actually worth, rather than telling people the truth: hey, your job is worth an apartment and a used car, at best.

Here’s a very very ‘old school’ notion. The top one percent sit down and consider how long they can sit in that position before there is an implosion from society. That implosion will either by legislative action wrst some of their profits or they could make the choice to make a little less and increase wages and re-invest in the US.

I am not a fan of revolts, but the bailouts as wellas what occurred still smells bad and tastes worse than it smells. How long before the have nots decide to start having by any means neccessary? How much is a billion more, more or less?

It won’t matter if the money was earned or unearned. Whether it was obtained legally or well within legal boundaries. I think there’s a subtle warning in this election. The current WH occupant is only mouthing social theory. Perhaps, one day the one percent will find themselves crying,’Let them eat cake.’

Ron Unz……Any kind of government intervention in the broad economy,other than for safety and health reasons,is usually counter productive. Minimum wages, always inflationary, also tend to cut off the bottom rungs of the economic ladder thus perpetuating the poverty class in America. Your point of college being wasteful,uneconomic and costly is true. College is for people who need specific skills for certain occupations in life(doctors,lawyers,chemists,biologists,physicists,engineers and so forth). Better to go into the Trades or ,better yet, become entrepreneur minded and start a business. Also,the notion that minimum wages boost payroll taxes shows how far down the path America has become toward a collectivized society. That is the notion that one does not own the fruits of one’s labor but that fruit instead belongs to the State to be redistributed as seen politically fit. Maybe the answer would be to abolish all payroll and income taxes until a certain high level of income was reached. This would allow more wealth to remain in the economy to create even more wealth and thus more real jobs. In the long run,as you suggest, government interference in the economy has perpetuated a wasteful,bloated bureaucracy plus a literal army of parasites who game the system for whatever economic advantage they can. Raising the minimum wage is not the answer. Better to work to dismantle the present tax and spend welfare state while at the same time teaching people the tough love of self reliance and self responsibility. After all,this is what made America economically great in the first place.

As Archbishop Fulton Sheen put it, “Man is not for the economy, but the economy is for man.”

The reason certain sectors of the economy (science/tech) have boomed is because the federal government has directed spending in this area. It is largely defense/homeland security related (with varying degrees of separation). We have lots of people working from home as consultants for IT firms working for companies who get 95% of their revenue from government contracts. Looking at the largest corporations in places like Virginia or Massachusetts. You will see among the top ten employers in those states companies who get 90+% of their business from the federal government.

We will defend and secure our way into prosperity. Then again, Obama met with Rev. Al Sharpton to discuss the looming fiscal cliff. Maybe we’ll extort out way into prosperity.

Some people never learn. It is precisely this meddling in the free market by Government that has produced this low growth economy.
In addition to lost jobs any additional increases in prices would cause a greater increase in the CPI which would cause workers with built in COLAS to receive wage increases which would cause the price of their product to increase which could result in more jobs going overseas. Any addition to the CPI caused by this ridiculous idea would cause Social Security payments and Government pensions to increase which would increase the deficit even more.
Any wage increases due to anything other than an increase in productivity will have more negative consequences than positive which would cause people like this writer probably suggesting even more meddling in the economy.

My early Austrian tendencies sees this as an inflationary practice that will cause a brief wage bubble. The market will eventually catch up and we’ll end up in the same situation. Some of your arguments regarding the cost-benefit of minor increases as compared to wages is interesting. I’m an armchair economist and am not so sure if the math would work (again, given my leanings). But I’m sure that it’s not strictly economics…

The segment about education cost resonates very strongly with me. Unfortunately, I see the problem as much more than wages. Sure, a wage increase could potentially make people realize that a college degree is unnecessary to live a sustainable economic life. But there is a deep stigma in our society about people who do not attend a post-secondary institution. There is even now a stigma for those that attend a less than four year post-secondary institution. From a very young age, children are told that college is the only way to make it. The only way to live the good life is to sit in classroom for 15-20 years of your life. It’s obviously the result of generational assumptions and experience — “Dad and Mom went to State University, so you have to, too.” Other paths are eradicated from early on. The trades and artisan careers are grouped into the category of the “unfit for advancement.” Children are discouraged from using their God-given talents and abilities in order to pursue a cubicle job. The society promises them prosperity if they just put in those four more years. Plus, “everyone needs that college experience to live a little, right?”

The education system is broken from the bottom up. We’re totally missing the boat with all of our policy directed towards “better test scores” and other top-down bureaucratic “fixes.” The technocracy is disabling and it’s only growing bigger and faster as we scramble to try and fix the mess we’ve created. Centralization of education underpins the debacle of our public school system.

I want to keep writing, but what really matters is that our problems of the wealth gap, poverty and unemployment are very cultural and not simply economic. When we approach these issues with government policy strictly by viewing humans with homo economicus presuppostions, we’ve already lost the battle. We’re just centralizing, bureaucratizing, and immobilizing our country. We kick the can down the road, just in another way. Wages aren’t enough. Our culture is broken.

Excellent article! The private sector would be wise to distribute more of their profits to their workers rather than to shareholders. No one is saying they should distribute all or most just more. If the private sector refuses to do so, the government will eventually do it for them. If the government is then prevented from doing so, people will take things into their own hands (revolution). Income ineqaulity is pernicious.

The pressure on wages are downward. Anti-labor and right-to-work laws are meant to increase the bottom line of commercial enterprises, presumably for the purpose of expansion. Though there is no guarantee that any particular company will use cheaper labor for expansion, they will commonly tell you that they can hire more people if labor cost, (was paid), less. So the companies do well but not necessarily the employees. I think the average wage would have to be around $25 or $30 an hour for an employee to be able to buy as much with a dollar as that employee could have bought in the 1970’s. One might effectively argue that business in America owes much of its overall 30 year success to shrinking labors costs rather than by risk, innovation or invention. Risk being mostly by utilizing other people’s money by loans and by floating various investment “instruments”.

I agree that the lower end of the income spectrum righteously deserves a massive pay increase and that this would reduce the utilization of social programs and increase retail sales. For some to argue that a mere $100 tax rebate would have an appreciable effect on the national economy, imagine what an increase of five or eight bucks an hour for wage earners would do for it! Spreading the labor cost load out into product pricing would be nearly academic and easily done in my opinion.

This one article utterly restores my confidence that conservative thought still has a great deal to offer in the public discourse of the American Republic.

Employers always whine about the impact on their suddenly negligible profits when the minimum wage is increased, but more money in the hands of working families is always the engine of renewed prosperity.

The reason for doing it by law is precisely to provide a level playing field. One magnanimous employer doing it on their own can’t compete. If everyone has to pay increased wages, everyone benefits from the resulting prosperity, including (as noted above) Wal-Mart.

I wonder how many out there will have the knee jerk reaction that this is a socialistic idea. Getting business off the public teat and supporting participation by labor in the benefits of capitalism should be squarely in the conservative camp. Finacialization and legislative moat building for business is not growth, it is rent seeking and a form of hidden taxation. Raising the Minimum Wage back up to the level of the late 60’s would be a good start towards maybe going back to a society where a single wage earner can actually support a family again.

A tight labor market drives wages higher, but unfortunately the elites in both political parties refuse to enforce immigration laws. Thus the country has been flooded with poor unskilled people and wages have stagnated for those without a college degree. All the jobs teenagers used to do during the summer are now filled by illegal immigrants. The kitchen at my favorite Prime Steakhouse is staffed with nothing but illegals. When I was college back in the 70s I paid my tuition by working in a fine dining establishment.

Bravo! the article is good as it does identify how lower middle and working class Americans have been thrown under the bus by the last 30 years of “supply side” and trickle down economics. Raising the minimum wage is an excellent idea if not blocked as usual by the corporate elite and the Wall St juggernaut. As Mr Unz suggests, this would merely restore the minimum to its value in the 60’s. The elephant in the room is the devastating loss of collective bargaining and the legitimate rights of working people to belong to a trade union . The 2 party duopoly in D.C. love to affirm the democratic rights of workers in places like Vietnam, China and Iran. However here at home the cheap labor model featuring union busting and class warfare is considered one of the great achievements of the new services economy.

I admit I only read the first half of this article and briefly scanned the rest, so maybe this is addressed and countered, but here’s the issue I see with raising the minimum wage: it will increase unemployment and underemployment.

With the Affordable Care Act coming into play, we face a future economy as follows:

Most of the working poor will find themselves working two or more part time jobs. Full time employment will be only for management, highly skilled professionals, and executives. Everyone below that level will be relegated to multiple part time jobs (so their employers can avoid the onerous requirements of the new law) and still these wages will remain stagnant, even if you raised the minimum wage, you’re only pushing the least skilled, the older over qualified, and others who don’t fit into these particular roles out of the job market.

We will end up with far more young, minorities, elders, and other low skilled / over qualified people on the government dole to survive.

The problem is that we have a mismatch between what the future economy will look like and what we encourage our future workers to do. I often say, not everyone can be an geneticist or a lawyer, so why do we encourage so many of our kids who may not have the apptitude for those careers to take out huge loans and end up dropping out or finishing with huge loans and no job prospects?

I would encourage every young person thinking about going to college to reconsider and instead, join the workforce whereever possible for now, maybe work your way up into a job that pays your tuition, and THEN go to college. Future generations will have to follow this pattern to be successful:

1. Graduate highschool and work a couple of low paying low skilled part time jobs
2. Prove yourself in time in those positions and move up to a more senior position in one or both (whichever will hire full time)
3. Put in more time and work up to management, then seek out benefits like tuition reimbursement
4. Go to school part time while working full time, after several years finishing your degree
5. Use that degree to move into an executive position with your company.

All in all, this would probably take 10 or more years since graduating from high school. The millenial generation believes erroneously that they will be handed a high paying job one they graduate high school with their liberal arts degree, despite the lack of job experience and despite the lack of connections gained through life experience.

Wow never thought I would see this on a conservative web site (or is this a set up?). Nevertheless, its fairly simple: if you want less government, increase and protect the wealth of the working class. Unfortunately, the minimum wage is probably the most simple and equitable way. Implement gradually.

I simply can’t imagine that providing employers with an artificial incentive to cut jobs, cut hours, and refrain from hiring new workers can work to the benefit of the lowest strata of American society. Yes, low take-home pay is a problem, but so is unemployment, and the inability to secure an entry-level job has a poisonous effect on an individual’s prospects for better employment in the future. Some workers would no doubt benefit from an increased minimum wage, but the broad middle class would simply see price increases while the underclass would be knocked further out of reach of economic opportunity.

Did I read a seriously well thought out piece about raising the minimum wage on a website marked as conservative?

Seriously.. I only came here a few weeks ago. Is this normal? This is also the place that showed that wonderful item on copyright reform.

I mean, I agree to the concept, but thought that there was sufficient argument that it wouldn’t work. In fact, this seems to push the idea of the ‘living wage'; setting a minimum rate that a person could live on without government services like welfare.

It is compelling, especially since the article suggests that the current solution isn’t working, which is a frightful prospect.

I am compelled, however, to ponder something: while raising the wage won’t result in a mass drop in jobs, it will cause some drag to job growth as employers push to try making due with fewer workers, which gets to this question:

Do we prefer having 3 people employed at 12/hr or 5 people employed at 7.25.

Both situations result in an overall similar cost to the employer (note this is just a rough example to serve the point of “higher paid but fewer or more at lower pay”, not to resemble true data as it won’t account for other labor costs)

There’s benefits to both concepts. The former means less people are pulling from the government (2 people unemployed vs 5 people below the poverty line). The latter means more people actually working and, thus less people having their skillsets decay. The latter also means not seeing cases of the employer trying to make 3 people do the work of 5, burning them out much faster and lowering the overall quality.

Overall, though, I believe the former might be the better option. However, I fear that I may be missing some viewpoints that would discredit the idea. Thus I present my case here in the hopes of the replies helping to give me a full picture.

1. The latter may actually lower the number of available jobs: When an individual has a job that doesn’t earn enough, they pick up another job to pay the bills, either via another person (2 income families when the original plan was for only 1 wage earner) or by the individual working two jobs.

As such, $7.25 would compel the 5 to take up other jobs. Potentially, that could mean a total of 10 jobs taken up by those 5. The former’s case could, at best, be seen as 7 jobs ‘used’ (3 originally taken, 2 lost through layoffs, 2 replacement jobs for the unemployed). Given that, increasing the wage to the point that individuals aren’t compelled to take a second job would result in a net gain that offsets the job losses.

2. Fewer people on the government dole.

Interestingly, this concept is already carried out via the recent increase to 7.25. An individual making minimum wage at full time makes just enough to avoid most government services and the EITC if they are alone. Note that the increase came at the time of the recession, which makes seeing fewer full time workers using them hard to spot among the millions out of work or working part time. Still, such people are on the edge of receiving these services: all it takes is going to part time-30 hours instead of 40-or having a child to open the floodgates. Since they are already working, there isn’t much that can be done to change their situation since we don’t demand they take a second job or find a better one.

In the latter situation, the three working are far out of the reach of government services if they are working anywhere close to 30 hours. The two who aren’t working are receiving services, but fall into the push to gain employment applied by such services. If we include systems to train those individuals into new fields, we stand a good chance of moving them into some kind of work, thus removing them completely from the system.

Also note that our current set of services cannot, in any way, compete with 24k in income. You won’t see many opt for the government dole instead of that. Those that will choose to opt for it are already using it now anyway.

So 5 people who are a hairbreath away from unlimited services or 2 people who are receiving it along with a direct push to become employed and, thus off the service.

3. More tax revenue.

While going from 7.25 to 12/hr full time doesn’t increase how many pay taxes for the most part (single people with no children will sit right at the ‘pay something’ at 7.25 and the child tax credit and HoH status just eats up the tax liability of 12/hr) it will push part timers into ‘enough income to pay’ range and cuts down on how much extra income people receive come April (said single w/ child at 12/hr loses about $2000 in refundable credits thanks to the increase in taxes and the drop in EIC).

The other ideas presented in the article also apply, such as more income towards those most willing to spend it on necessities (thus not only feeding the economy, but feeding it to places such as basic clothing, food, and repairs more than to the latest iPhone) and also providing an alternative to feeding the higher education bubble that’s set to explode (which also means fewer government loans that can default, and less demand for higher end work since some people actually would be content to remain a janitor if they could just make a basic living out of it)

Meanwhile, the biggest argument I’ve heard against the minimum wage, other than the job losses, is how jobs will be taken from teenagers who will not be able to compete with the regular workers. Given that this is already happening at the current wage, I find this a diminished argument. Along with this, teenagers aren’t required to have a job at that age, if it really comes down to that situation. Included with this is the concept that the jobs offered to teenagers may not be the best sources of teaching good work habits. A teen that’s lazy at school won’t learn to be hard working at work: instead they will learn how to earn a paycheck while doing as little work as possible in an environment that tends not to value them.

Lastly, I’d rather have the food I eat handled by someone who values their job as a permanent income and, perhaps, even a career position, than someone who sees it as ‘afterschool extra shoe money”.

The other argument of companies outsourcing jobs overseas is rather moot, given that there’s no way we can even hope to compete with the labor costs overseas. Opening the flood gates to very small income work would just mean many more people working jobs ‘not worth the money’ while being subsidized by the government. Real employment should be a job that allows a person to be fully removed from government services. Otherwise, we can just give everyone government jobs (at least then we might get some improvments to our infrastructure)

Thus the idea: instead of trying to keep up a large safety net and large tax payouts to try to compensate for diminishing incomes, apply an income tax. We can then lower the corporate tax rate and perhaps give Labor based deductions for businesses to compensate. The alternative seems to be either subsidizing a nationwide education system or just take the Social Darwinian approach and just let those people eat cake.

Raising the minimum wage is also very popular, with local and state-wide increases regularly winning at the ballot box.

I shouldn’t gloat, I know, but it’s nice to see a conservative make the same case that labor-oriented progressives have been making for at least 15 years. Now, if only you all could let go of your residule distate for unions, we could see real wages really take off, with shorter working hours as a benefit for both the currently employeed and under or unemployed. Higher wages and lower unemployment means a smaller lumpen proletariat, too, which would lower the pressure on existing government social workers and case managers, as well as the pressure to hire more and more of them (Give me an Amen!).

And as long as we’re going to de-emphasize the Earned Income Tax Credit – at one time the conservative alternative to raising the minimum wage – how about we undo some more of Ronald Reagan and the late Jerry Solomon’s work and return to the system of grants that once made up 75% of federal financial aid for higher education (I think it’s now 25% and dropping)? The student loan bubble hit students of the traditional professions (law, medicine and dentistry) 20 years ago and has been migrating out and down ever since.

Raising the wages of the lowest paid generally results in raising the wages of the next rung up and the next rung and the next (with gradually reduced impact, I imagine) so that employers can maintain some differential in the wages of their workers. The folks currently making $10 or $12 an hour will see their wages go up to $12, $13, $14 or $15 per hour. And I think you are incorrect about general inflation usually outpacing wage growth, at least moderate wage growth. I believe it will reduce the value of fixed assets, of capital, but I don’t see it as a bad thing if Warren Buffett, the Koch Brothers, the waltons or George Soros see their net worth reduced by a few billion dollars.

Tom,

Productivity has been going up for the last 20-30 years, as oten (or more often!) from shear speed-up as from automation, and workers have NOT seen an increase in their wages and benefits as a result, aside from a short bump at the end of the 90’s. The wealth created by that increase in productivity has all accrued to the wealthy and the super wealthy, and a simple raise in the minimum wage (and indexing it to the cost of living!) is a reasonable first step for correcting that imbalance.

libertarian jerry,

People like shared risk and shared sacrifice, and social insurance that folks pay into is not exactly the gulag.

To be fair, there have been some attempts to automate such jobs as fast food service – I think one of them actually outsourced the drive-through line to India, I kid you not – so a raise in the minimum wage could have a negative impact on some jobs, but the overall benefit to the economy and to the working class would be far more substantial.

Oh, and a lot of the current minimum and near-minimum wage jobs – all of those health and direct care aides, for instance – are held by adults and parents, not kids. Man, the positive impact on rural counties of all of those direct care workers receiving a significant wage increase would be incredible. Revived localities, less pressure to leave for the cities and suburbs (and colleges), and less pressure to maintain or open new prisons and jails. And if it results in better training and targeted certification in the helping professions, all the better for everyone involved, from the clients to the caregivers to the generally much less expensive community colleges.

Every time I read one of these, I can only think of how much easier the negative income tax would be easier to implement.

As regards the central conceit of the article – that minimum wage increases would assist in myriad ways to correct stagnant median income – I would ask the author to consider such action against the larger spectrum of data. Namely, to my knowledge, median compensation has been keeping pace with productivity increases: the market has been rewarding its employees commensurate with fundamental expectations, but those rewards are apparently being chewed up before showing up in median wages.

So, what to make of that? One conclusion is that the market is still well-functioning as regards compensation, but something has gone cock-eyed regarding the relationship of wages to total compensation.

A corollary to the above is that if compensation is market-correct and expected to remain at its current position, then an increase to wages implies a decrease to non-wage compensation in order to maintain overall levels of compensation.

The substance of the wage/compensation gap should be obvious, or at least seemed so to me: employer-provided insurance explains the gap between compensation and wages. I know that roughly 10% of my overall compensation is in premiums paid by my employer, compensation which never appears on any pay stub I receive.

The implication is that an increase to wages would erode private provision of healthcare, a net gain of zero for society and likely a net gain for the poorest, a net loss for the middle class management, and no change at the executive level. That really ought not to be the way to address the wage shortfall; at least, there must be better ways, yes?

How to address that gap – presuming we’re looking at the private healthcare effect – leads naturally toward a consideration of America’s egregiously expensive healthcare system, and how much damn money is wasted in it compared to any other delivery system in the world.

So long as healthcare costs dramatically outpace inflation, there is little hope that the net gap between wages and compensation will shift to wages. Frankly, until America accepts some form of cost-controlled socialized medicine – we have a world of implemented examples, good and bad, from which to learn and model from – that gap is going to stay, and mucking about with minimum wages is only going to rob middle class Peter to pay lower class Paul.

Once again, another example of why I love TAC. The undervaluing of work is a major moral and economic scandal in this country. It is outrageous that people who care for our children, the sick, prepare our food, keep our public places clean and the like are paid as if their work was not worth anything. If every CEO in this country disappeared tomorrow, life would go on with hardly a hiccup. If low wage workers disappeared tomorrow, we’d be screwed!

Yet another writer who should be fired from this site and never come back. The minimum wage is one of the stupidest and most counterproductive laws in the country. It hurts the people that it claims to help. All it does is price people out of the market who cannot produce the hourly rate that the minimum wage required their employer to pay them. This is a classic case of what is seen vs. what is unseen. You can see the people who are making a new minimum wage. What you can’t see are the people that would have been hired had the minimum wage not existed.

BTW, the people worrying about the effect that raising the minimum wage will have on employment aren’t considering a simple reality: most companies are squeezing the work which used to be done by 2 or 3 people out of each employee and have been for some time. There’s very little excess there for them to squeeze more work out. There would be businesses which would have to face the reality that they just aren’t successful enough to survive in a first world country. Which is fine – others will take their place. We shouldn’t be enabling failure with slave wages and government subsidies. Most businesses will have to combine various cost cuts, more equitable distribution of profits and some increase passed onto customers. We Americans create enough wealth with our labors that there’s more than enough to go around for all who participate. Asking for that wealth to be distributed more fairly – without government redistribution – is right, moral, fair and reasonable. This is why we have government – to keep people’s worst impulses from running amuck.

Unions had absolutely nothing to do with the rising of wages or the bettering of working conditions in America. The real reason these things happened (and will hopefully happen again) was due to capital investment. Investing in better means of production to increase productivity is what really raised wages in this country.

Unions have traditionally been supportive of the minimum wage not because it improves anyone’s wages, but because it causes less jobs to be created. Then, rather than the company creating jobs, the unions can take that money for themselves.

This has even had racial implications in countries like South Africa. The white, racist unions there support minimum wage laws because the last thing they want is their company using its money to hire lower skilled black workers. They know that the minimum wage laws keep black people out and that’s they way they want it.

S Peter Cordner – yeah, healthcare cost inflation has to be playing a role here. I’m not convinced it’s THE reason, but it’s gotta be one of the keys. 7% a year or whatever it’s been over the past couple of decades is just insane, and it’s wrecking people’s budgets (household and governmental).

Sambhavami, yuge, yuge! All argument against the minimum wage rest on some heroic assumptions – that there are no economic profits beyond the short term, markets sooner than later price everything right, and market prices serve the cause of social mobility. Sadly the ones offended by the author’s modest proposal ignore his most compelling exhibits – real wages are down, wages do not contribute so much as imagined to costs, and that the oft quoted proportionality of wages and unemployment isn’t so, given the case of other wealthy countries particularly Australia. Ron is right and has demolished every argument against the minimum wage, showing them to be bogus. I request his detractors to take a cold shower and abandon their misconceptions and illusions.

” Namely, to my knowledge, median compensation has been keeping pace with productivity increases: the market has been rewarding its employees commensurate with fundamental expectations, but those rewards are apparently being chewed up before showing up in median wages.”

By my knowledge, the compensation increases seen aren’t being proportionally placed. That is, the higher your wages before, the faster they are growing now. The lower your old wages, the slower they are advancing. The lowest income have been producing more, but have not seen either an income increase or an increase in other compensation such as benefits (instead, benefits have been dropping.. which helped spark the health care and social security debates).

I bet this can be proven by crosschecking the overall compensation with compensation based on income status.

@Rob
Given the incomes of the countries outside the US and the sheer cost savings of automation, I don’t think anything other than a complete removal of the minimum wage will make any real difference to either issue. Instead, the article notes that there’s a large number of positions that cannot be outsourced that will benefit from the increase.

Thus not increasing the minimum wage won’t preserve jobs set for automation or outsourcing. Increasing it will allow the jobs that remain to be worthwhile.

Besides, if China is of any judge: outsourcing will be fixed by simple time. It seems once you push any country through industrial revolution, they respond in a post-revolution demand for workers rights.

This is a horrible idea. Most economists believe that the minimum wage is bad for poor people and the economy as a whole. For one, it makes it much harder for low skilled teenagers to enter the work force and start gaining skills and good work habits.

Our economy took a major hit through the export of our manufacturing base in the name of “free” trade. Did anyone really think a country could remain economically afloat trading monopoly money back and forth? Get real.

Add to that tens of millions of immigrants (illegal and legal) and millions more who want to come here and are willing to work for peanuts and you have a recipe for the great American pauperization.

Re: how about the REALLY conservative prospect of admitting that many jobs just aren’t going to pay very well, and that’s life.

How about also admitting that sometimes criminals victimize people and that’s just life, so why bother having police? That sometimes buildings catch of fire and maybe we’re better off if they burn to the ground. That some people get sick and die and we’re never going to cure that 100% so why bother having healthcare?

I don’t think nonchalant fatalism of this sort is remotely conservative.

Re: Most economists believe that the minimum wage is bad for poor people and the economy as a whole.

Most economists can’t come to a conclusion if you laid them end to end.

What is this blasphemous nonsense? How dare this author (hack is more like it), claim that the way to raise wages is by raising wages. Doesn’t he know that the way of Wal-Mart is the way of business today?

Anyways, why do these people, who constitute the 47% of which Mitt so rightly derides and dismissed, deserve any attention at all? Let them wallow in their relative poverty and be happy for what crumbs fall from the table.

“Any wage increases due to anything other than an increase in productivity”

the remarkable increase in productivity over the past 30 years hasn’t done much for wages has it! tho’ it has lined the pockets of, y’know, some people.

again and again in the posts above (not in all, of course) there is an unspoken assumption: that workers ought to have their lives controlled by those who are out to maximize their own profit. that’s the “free” market! it’s a sure sign of “lack of responsibility” and “lack of self reliance” etc. when working people cotton on to the fact that they are the wealth creators and act accordingly.

This article is vested in the notion that the ONLY way to earn income is through a job. It is one-factor thinking that ONLY see labor worker input and not capital owner input. Yet, the author states: “Meanwhile, an astonishing 93 percent of the total increase in income during the recovery period has been captured by the top one percent of earners, who now hold almost as much net wealth as the bottom 95 percent of our society. This polarized situation does not bode well for our future, and unless broader social trends in jobs and incomes soon improve, dark days surely lie ahead.”

No where is there a discussion of how the top one percent of earners actually EARN their income, except for the vague reference to “net wealth.”

What is never addressed is the reason people are poor and inflicted with poverty is that they are capitalless and do not own income-producing productive capital assets embodied in the companies they work for and other companies they do not work for. Until we reform the system to enable ordinary Americans to acquire viable ownership shares in the FUTURE productive capital asset growth of existing and future companies, and pay back the investment loans out of the future earnings of the investments, increasingly more Americans will fall to poverty levels. This is because full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.

Because there are not enough “customers with money” to purchase the products and services that the economy can deliver, there is a gross imbalance in production and consumption because of CONCENTRATED OWNERSHIP of the productive capital assets of production among a few in the population. This denies the vast majority the income and thus purchasing power to fulfill their demand for products and services to enrich their lives.

Thanks for the reply. As someone who has worked in the service sector during minimum wage increases, trust me, even if they could afford to most businesses will not increase pay across the board all at once without a corresponding increase in earnings. They can raise prices to raise earnings (after they raise prices to regain profits lost from a forced wage hike), but that may drive away customers until all prices rise, including the price of goods that people on minimum wage have to buy.

Both marxist and libertarian economist have pointed out that working class wages have stagnated, not increasing meaningfully for the last four decades. How many times have we increased the minimum wage in that time? How successful were those attempts at rising the wage (in terms of spending power, not arbitrary numbers) of the average worker? Is there any evidence that minimum wages, in contemporay American history, that this kind of fix has fixed anything? If higher minimum wages worked, then why would we need to raise them again?

A far simpler solution would be to reward the people who actually earn raises with an increase in spending power. For this to happen we must first get inflation under control. Would this fix everything? Probably not. But at least a stable currency would allow the American people to orientate themselves in the economy, and that orientation would allow us, both individually and collectively, to make better economic observations and thus make better economic decisions.

Of course to fix the inflation problem we would need to control spending, as the government relies on inflation to pay down its debt. Solving the spending problem could help balance out the inequality gap by taking aim at those top earners who mooch of government spending (Lockmart). Hopefully, once the spending and its related debt are under control, taxes can be lowered. This in turn could help those low earners keep more in there pocket, rather than giving them a wage increase as well as a larger tax burden.

The funny thing about libertarianism is that it believes in nonviolence and free associations. When feudalism gave way to industrial capitalism in Britain the people who worked the land for their daily bread could no longer do so because it was enclosed. They had to go work in factories. This was an act of political violence. If eugenics (decrease supply to improve demand) and the minimum wage is unacceptable then what would the third option be for the 1/3 of Americans (surplus) who have no economic value? Feudalism?

Roman, great analysis. Id like to add more but culture is a big issue, and Ill ramble on too long

Mr Unz, even though I disagree with you, I thank you and the American Conservative for broadening the discussion. Im not a conservative. Im happy to borrow from conservative influences, but Ill borrow from anybody. Lets just say I would not pass any ones ideological purity test. For me, writers and media outlets such as these makes me feel like I have a place in the discussion. I dont see rhetorical, self righteous and angry politics helping our country. We need more open minded thinking. Thank you.

sreve, socialism is where the public owns the means of production. Better wages is not socialism wages have been stagnant since about 1985.
~~~
Since our economy is based on consumerism a higher wage should result in more consumption and the more consumption the more jobs created while shareholder profits rise.

But since the end of the cold war whole nations have been opened with lots of cheap labor. And since we have entered the post industrial stage and gone into financial capitalism, whiich is mostly just trading pieces of paper backed by real estate….well, you see the results.

And the way things are going, since the shadow banking has some 23 trillion in debt based products, and the middle class being decimated by cost increases in food, health care and energy and more and more on the welfare and unemployment role…many of these debts simply cant be paid and then our Wall Street corrupted politicians in DC will then begin austerity measures and things will get considerably worse.

Tax cuts have not created jobs. Privatizing has not lowered government debt or decreased its spending. The government has been spending more and more and more and more for decades now. The broken window theory is shot to hell. Wars dont stimulate economies.

The fact is things, as they are, wont end well and socialism or nationalism is not the cure nor is bailing out to big to fail. And maybe that is what should have happened.

That.. is a unique way of handling the situation. So If I read both the comment, your article, and the Act right:

Everyone gets a ‘capital card’.. sort of a debit card with a stock of money used to buy investments.

Using that card, people can invest in certain companies that they are already dealing with-either via work, via buying a service, or a few ‘safe’ preapproved companies. Aka, I can invest in my current phone company, my current job, and/or, say, Microsoft (since I can’t see anyone not include them on the list).

btw, like the limitations: I had fears of Head-On attempting to advertise their company to invest in.

One BIG problem however, the initial capital. am I right in reading that the Act expects the government to give 7000 to every child upon childbirth and expect 1000 in dividends in the first year? What sort of investments are being done to ensure a 14% year over year growth?

The invested capital has to be big by the time the person becomes working age. Note that investments typically work because 1: the person isn’t pulling from the fund regularly and 2: the person doesn’t require the same % of growth every year.

That is, I put in 50k, then just let it sit. If the next 5 years amounts to 5% interest, that’s ok, since year 6 would net about 35% interest, amounting to the ‘well documented’ 10% yearly interest overall.

If I then have 50k invested, even if it isn’t mine, and I’m only making $7.25/hr, I’m going to want that 5k a year (10%/yr) of my own to supplement my income to an effective $9.65/hr (which is still rather low). If I’m allowed to do so then unless the government is adding extra capital then that item isn’t growing.

The website shows that there will be hundreds invested. However, the interest gained is rather high, especially with such a limited assortment of stocks allowed. Without that investment, this makes a great retirement system, but it won’t be enough to serve as supplemental income.

@William

As far as minimum wage is concerned, it’s not really meant to boost other people’s income. The theory of incomes being ‘bumped up’ is just a nice side affect if true. The true purpose is to keep the lowest incomes out of poverty, by keeping the lowest income available above the poverty line. In that task, it has been successful until about 40 years ago, when the minimum wage was not raised enough to counteract inflation. Instead of increases, the EITC was established as an alternative.

For the record, the recent increase has brought the minimum back out of the poverty line.

The article itself is advocating, essentually, a ‘living wage': an income that can be relied upon to..well.. live on. It would not be a great standard, but it would be a ‘humane’ standard (shelter, food, basic necessities, so on).

This isn’t for the middle class. The middle class would have to be assisted through other means. This is for the lower class.

As far as controlling inflation to establish better raises, that, honestly, seems an odd link. Raises are not a product of excess money held by a company. It is given as a means to better hold preferred talent: sort of a “please stay with us and keep working well”. It comes from a company seeing value in their workers. This is why we had relatively low inflation, high productivity, and high profits during the 90
s and 2000s and yet wages continued to stagnate. It was automation and outsourcing that downvalued the lower class and lower-middle worker.

Controlling inflation is important. However, I don’t see how that links to a sudden increase of income beyond good old “more money for me, I give more money to you” which has not been proven true in the field. It also has no link with the lowest paid who have only seen increases thanks to the minimum wage law.

Mogden says:
November 19, 2012 at 1:25 pm
This is a horrible idea. Most economists believe that the minimum wage is bad for poor people and the economy as a whole. For one, it makes it much harder for low skilled teenagers to enter the work force and start gaining skills and good work habits.

A far better proposal would be to abolish the minimum wage entirely.”
—

1. any examples of articles that you find applicable to that theory? Note that I stopped buying into ‘most’ claims back when Most economists believed that the housing market would never drop.

As far as teenagers gaining skills, unless they plan to go into a retail or money management position (and the latter is a stretch), such teenagers would be better off with internships or focusing on skills related to their chosen profession (or choosing that profession in the first place). A 6 month job at McDonalds doesn’t offer much to a typical resume.

As far as ‘good work ethic’, I would like to see an article with actual data, because the personal experience I have with positions available to teenagers makes me question what sort of worth ethic is gained from such positions that wasn’t already a part of the person’s identity beforehand.

As I said in another comment, I have heard that raising the minimum wage is a ‘bad thing’ and simply accepted that. This article has finally led me to question that logic, so I do want to see counterexamples.

For example, how does the economy benefit from opening a host of new jobs that leave people in welfare anyway? Working while under the government dole is still being dependent on the government.

libertarian jerry says: “Any kind of government intervention in the broad economy, other than for safety and health reasons, is usually counter productive.”

Like libertarian jerry, many comments ignore the reality of considerable “intervention in the broad economy” that has benefited the most wealthy. Spend some time reading about the money spent by lobbyist on Congress and the resulting laws that benefit the organizations that employee the lobbyists.

Subsidies of the Rich and Famous (Robin Hood in Reverse) by Tom A. Coburn, M.D. U.S. Senator (R-OK), Nov 2011 (37 pages of details and many footnotes with links to detail)

“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multi-millionaires are even receiving government checks for not working. This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations.”

“We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.”

Connecticut: In 2011, Walmart topped the list of Medicaid employers. As of May 2011, 3,654 Medicaid enrollees in the state were either Walmart associates (1,189 recipients) or the children of associates (2,465 recipients)